Homebuyer's Bootcamp

The first question every homebuyer asks—and the most important one to get right. Your affordability depends on several factors: your income, debts, down payment, and the current interest rates.

What Gets Included in Your Housing Payment?

• Principal and Interest (your mortgage payment)
• Property Taxes
• Homeowners Insurance
• HOA Fees (if applicable)
• PMI (if you put down less than 20%)

Don't Forget These Costs:

Beyond your monthly payment, budget for maintenance (1-2% of home value annually), utilities, and an emergency fund for unexpected repairs. A good rule of thumb: If you're stretching to afford the maximum, you're probably buying too much house.

Your credit score is one of the biggest factors in determining whether you'll get approved for a mortgage—and what interest rate you'll pay. Even a half-point difference in your rate can cost you tens of thousands of dollars over the life of your loan.

What Affects Your Credit Score?

• Payment History (35%) - Pay everything on time, every time
• Credit Utilization (30%) - Keep balances below 30% of limits
• Length of Credit History (15%) - Don't close old accounts
• New Credit (10%) - Avoid opening new accounts before buying
• Credit Mix (10%) - Having different types of credit helps

Quick Ways to Boost Your Score:

• Pay down credit card balances below 30% utilization
• Become an authorized user on someone else's good account
• Dispute any errors on your credit report
• Set up automatic payments so you never miss a due date
• Don't close old credit cards (even if you don't use them)

What NOT to Do Before Buying:

Avoid opening new credit cards, financing furniture or cars, making large deposits or withdrawals, or changing jobs. Lenders will pull your credit again right before closing, and any changes could jeopardize your loan.

One of the biggest myths in homebuying is that you need 20% down. While a larger down payment has benefits, many first-time buyers purchase homes with as little as 3% down.

Common Down Payment Options:

• 3% - Conventional loans for first-time buyers
• 3.5% - FHA loans (more flexible credit requirements)
• 5% - Conventional loans for repeat buyers
• 10% - Reduces PMI costs significantly
• 20% - Avoids PMI entirely, best rates
• 0% - VA loans for veterans (no PMI ever!)

Down Payment Assistance Programs:

Many states and cities offer down payment assistance grants or low-interest loans for first-time buyers. Some programs offer $10,000-$25,000 in assistance. California has several programs specifically for first-time buyers and low-to-moderate income households.

Where Can Down Payment Money Come From?

• Savings accounts (most common)
• Gifts from family members (with proper documentation)
• Retirement accounts (401k loans or Roth IRA withdrawals)
• Down payment assistance programs
• Seller credits toward closing costs

View Our Loan Programs

Many buyers confuse pre-qualification with pre-approval, but there's a huge difference—and in competitive markets, it can be the difference between getting your offer accepted or losing to another buyer.

What You'll Need for Pre-Approval:

• Last 2 years of W-2s and tax returns
• Last 2 months of pay stubs
• Last 2 months of bank statements (all accounts)
• Photo ID
• Proof of any other income or assets
• Authorization to pull your credit

Why Pre-Approval is Worth the Effort:

• Know exactly how much you can borrow
• Understand your monthly payment before house hunting
• Identify and fix any issues before you find your dream home
• Shop with confidence, knowing you're approved
• Strengthen your offer in multiple-offer situations
• Close faster once your offer is accepted

Self-Employed or Non-Traditional Income?

If you're self-employed, own a business, or have non-traditional income sources, the documentation requirements are different. You may need business tax returns, profit & loss statements, or we can use alternative documentation like bank statements.

Learn About Alternative Income Loans

From pre-approval to closing, the home buying process typically takes 30-60 days. Here's what happens at each stage:

Phase 1: Preparation (Before You Start)

• Check and improve your credit score
• Save for down payment and closing costs
• Get pre-approved for a mortgage
• Choose a real estate agent

Phase 2: House Hunting (1-8+ weeks)

• Tour homes with your agent
• Attend open houses
• Research neighborhoods
• Make offers when you find the right home

Phase 3: Under Contract (30-45 days)

• Week 1: Offer accepted, earnest money deposited
• Week 1-2: Home inspection and appraisal ordered
• Week 2-3: Review inspection report, negotiate repairs
• Week 3-4: Finalize mortgage, title search completed
• Week 4-5: Final walkthrough, prepare for closing

Phase 4: Closing Day

• Sign all loan documents
• Pay closing costs and down payment
• Get the keys to your new home!

Learn from others' mistakes. Here are the most common errors first-time buyers make—and how to avoid them:

1. Not Getting Pre-Approved First

Falling in love with a house you can't afford is heartbreaking. Get pre-approved before you start shopping so you know your real budget.

2. Draining Your Savings for the Down Payment

You'll need money for closing costs, moving expenses, furniture, and emergencies. Don't spend every dollar on the down payment—keep a cushion.

3. Skipping the Home Inspection

A $400 inspection can save you from $40,000 in hidden problems. Never waive the inspection, even in a competitive market. It's your chance to discover issues before you commit.

4. Making Big Financial Changes During the Process

Don't buy a car, open new credit cards, change jobs, or make large deposits during your home purchase. Lenders verify everything right before closing, and changes can kill your loan.

5. Focusing Only on the Monthly Payment

A lower monthly payment sounds great, but if it comes from a 40-year loan or an adjustable rate that will increase, you might be setting yourself up for problems. Look at the total cost and long-term implications.

6. Not Budgeting for Ongoing Costs

Property taxes, insurance, HOA fees, maintenance, and utilities add up quickly. Make sure you can afford the total cost of homeownership, not just the mortgage payment.

7. Letting Emotions Override Logic

It's easy to fall in love with a house, but don't let emotions cause you to overpay or overlook red flags. Stay rational and stick to your budget.

8. Not Shopping Around for a Lender

Different lenders offer different rates, fees, and service levels. Interview multiple lenders and compare not just rates, but also responsiveness and expertise.

Closing costs are the fees and expenses you pay to finalize your mortgage, separate from your down payment. They typically range from 2-5% of the purchase price.

Common Closing Costs Include:

• Loan Origination Fee (0.5-1% of loan amount)
• Appraisal Fee ($400-$800)
• Home Inspection ($300-$500)
• Title Insurance ($500-$2,000)
• Escrow/Attorney Fees ($500-$1,500)
• Prepaid Property Taxes
• Prepaid Homeowners Insurance
• Recording Fees ($100-$250)
• Credit Report Fee ($25-$50)

Ways to Reduce Closing Costs:

• Ask the seller to contribute toward closing costs
• Shop around for title insurance and other services
• Use lender credits (slightly higher rate, no out-of-pocket costs)
• Close at the end of the month (fewer prepaid days of interest)
• Negotiate fees with your lender

What's Negotiable vs. What's Not:

Some fees are set (recording fees, taxes), but others are negotiable (origination fees, some third-party services). Your lender is required to provide a Loan Estimate within 3 days of application that breaks down all costs.

Learn About Refinancing Costs

If you're self-employed, own a business, or work as a contractor, the mortgage process is different—but homeownership is absolutely achievable. Here's what you need to know:

Traditional Loan Requirements for Self-Employed:

• 2 years of personal tax returns
• 2 years of business tax returns (if you own 25%+ of a business)
• Year-to-date profit & loss statement
• Business license or proof of self-employment
• CPA letter verifying income (sometimes required)

Better Option: Bank Statement Loans

Bank statement loans let you qualify using your actual deposits instead of tax returns. We analyze 12-24 months of bank statements and calculate your income based on what's really coming in. This often results in higher buying power for self-employed borrowers.

Other Alternative Options:

• P&L Loans - Qualify using CPA-prepared profit & loss statements
• Asset-Based Loans - Qualify based on your assets, not income
• Stated Income Loans - Available for certain scenarios

Tips for Self-Employed Borrowers:

• Keep personal and business finances separate
• Maintain consistent income in your business accounts
• Avoid large, unusual deposits during the application
• Be prepared to explain income fluctuations
• Consider waiting until after tax season to apply

Explore Bank Statement & P&L Loans

Thinking about buying a rental property or starting a real estate investment portfolio? Here's what's different about investment property loans:

Key Differences from Primary Residence Loans:

• Higher down payment required (typically 15-25%)
• Slightly higher interest rates (0.5-0.75% more)
• Stricter qualification requirements
• Rental income can help you qualify
• Different loan programs available

DSCR Loans: The Investor's Best Friend

Debt Service Coverage Ratio (DSCR) loans qualify you based on the property's rental income, not your personal income. This means you can buy multiple properties without your debt-to-income ratio being an issue. No tax returns or employment verification needed.

What Makes a Good Investment Property?

• Cash flow positive from day one
• Located in areas with strong rental demand
• Conservative estimate of 1% rule (monthly rent = 1% of purchase price)
• Factor in vacancy, maintenance, property management
• Good school districts and job markets

Common Investment Strategies:

• Buy and hold for long-term appreciation and cash flow
• House hacking (live in one unit, rent others)
• Short-term rentals (Airbnb/VRBO)
• BRRRR method (Buy, Rehab, Rent, Refinance, Repeat)

View Investment Property Loan Programs

Already own a home? Refinancing can help you save money, pay off your home faster, or access your equity. Here's when it makes sense:

Good Reasons to Refinance:

• Interest rates have dropped (0.5%+ lower than your current rate)
• Your credit score has improved significantly
• You want to switch from ARM to fixed-rate
• You want to shorten your loan term (30-year to 15-year)
• You want to eliminate PMI
• You need cash for home improvements or debt consolidation

Types of Refinancing:

• Rate-and-Term Refinance - Lower your rate or change your term
• Cash-Out Refinance - Tap into your home's equity for cash
• Streamline Refinance - Quick process for FHA/VA loans

What You'll Need to Refinance:

• Same documentation as a purchase (income, assets, credit)
• New appraisal of your home
• Proof of homeowners insurance
• Current mortgage statement

Refinancing Costs:

Refinancing typically costs 2-5% of the loan amount in closing costs. However, you may be able to use lender credits to cover costs in exchange for a slightly higher rate, or roll costs into the new loan.

Calculate Your Refinance Savings